What is the difference between a typical underwriting deal and a - ProProfs Discuss
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What is the difference between a typical underwriting deal and a bought deal?



Asked by GRAY, Last updated: Nov 23, 2021

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John Smith

John Smith

John Smith
John Smith

Answered Sep 08, 2016

In a typical underwriting deal, the risk is spread among many investment dealers.in a bought deal, usually only 1 underwriter takes on the entire risk (sometimes there may be a few dealers together that take on the risk).the reason why bought deals came about was because of the speed with which an issue could be broght to market under a short form prospectus. because the deal can be put together much faster than a traditional underwriting deal, there is less risk for the dealer because everything can be completed faster. so the dealer doesnt need to consider spreading the risk among many other firms in order to get the issue into the market.
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